Stocks Online
Be your own broker through online stock trading
By Maricar T. Manuzon

Traditionally, buying shares of stock of a company from the local bourse entails opening an account with the brokerage house you chose, and afterwards meeting up with the broker who will handle your transactions. With your broker, you then co-monitor the fundamentals, news and movement in prices of stocks you want to buy; that is, if you do not want to solely depend on his recommendations.

After the research, you tell your broker you are ready to order the shares. Once the shares offered in the market hit your bid, it would be a done deal. But you would have to wait for this news from your broker because, unlike him, you do not have access to the shares’ real-time quotes and your order’s status. The cycle is more or less the same in the case of a “sell” transaction. Aside from verbal advice, you will be mailed a few days after a confirmation receipt for every transaction as added assurance that the stocks are indeed lodged under or disposed from your account, as the case may be. Your transaction history containing all your done deals and investment position will also be mailed to you once a month.

The Third Party
Stock trading as described earlier could really be exciting at first, that is, before you realize that, most of the time, you are at the mercy of a third party – your broker – who may not even have your complete confidence.

Add this to the fact that you have to compete for his time because he is servicing other clients as well. You cannot expect your broker to attend to your call immediately all the important times – when you want real-time stock quotes, for example. It could really be frustrating if your broker is indisposed when most needed – like when you are in a hurry to buy or sell specific shares.

New Way of Trading Stocks
Electronic commerce might just be the solution to the concerns over the conventional way of ordering and selling stocks. After all, e-commerce is most oftenly called convenience shopping where you have online access to a complete array of products, and where your order is just a click away.

According to Pepito Bengzon, Vice President of BPI Securities Corporation (BPI Sec), the quick progress in electronic communication involving personal computers, Internet, and cellular phone simply tells us that people pay for immediate communication access.

The good news, Bengzon continues, is that the technology can now be useful in one’s investing activity. Imagine viewing prices of all PSE listed equities on real-time basis and being able to order online as well.

Wanting to bring this online convenience to investors, BPI Sec came up in May 2000 with an online, real-time equities trading facility, the BPITrade (www.bpitrade.com). Bengzon says that BPITrade is BPI Sec’s response to the communication revolution.

With BPITrade, one can buy and sell stocks listed in the Philippine Stock Exchange (and now, even government securities, common trust and mutual funds) available practically 24/7. During trading hours, one will receive real-time updates on the status of his matched orders or customized price alerts via email or cellular phone. Research on traded equities are available on the site as well.

Budding Sector
There are currently six trading sites in the market. Computer literacy and availability of internet access, however, are challenges online trading sites face.

The New Economy and, more importantly, the drastic decline in volume of stocks traded in the local exchange over the years gave rise to online stock trading sites. Bengzon says that this is especially the case of BPI Sec who holds the view that, indeed, migration to online stock trading is a means to achieve improved operational efficiency. Fact is, PSE’s trading volume and value have diminished dramatically over the years that hiring a sizeable staff of brokers and analysts cannot be supported anymore by the current volumes of trade. Bengzon recalls, “There was a time when I had four traders in the PSE floor and two traders in the office, now I have one trader in the office and one trader in the PSE floor.”

With BPITrade, BPI Sec has actually seen their stock volumes pick up. Currently, BPITrade online stock trading accounts for 2.5% of total PSE volume. Stock volume at BPITrade alone – that is, excluding non-online clients - could rank the online facility in the Top 20 among stock brokers.

Old Vs. New
About 60% of total BPI Sec volume is still coming from the traditional way of trading stocks. However, the remaining 40% of BPI Sec’s volume going through BPITrade represent 80% of total retail volume. Next year, BPI Sec intends to totally migrate its retail accounts to BPITrade. They are also finalizing a corporate module so that even their corporate clients will be able to trade through the online facility. Bengzon reveals that BPI Sec is actually eventually dropping clients who cannot migrate to BPITrade. Fortunately, the numbers reveal that this policy will not adversely affect topline revenues.

Allan Zapata, Manager at BPI Sec, notes that, aside from their existing investors, BPITrade also was able to recruit new investors who are originally not BPI Sec clients with the only requirement of BPI savings or checking account ownership, and maintenance of P5,000 minimum account balance in cash or stocks. There is no monthly subscription fee. The online facility is also able to charge the lowest commission in the market.

Inasmuch as one of investors’ main concerns is security and confidentiality of their accounts, BPITrade, Zapata explains, is secured by the most advanced security measures currently available. “BPITrade is only allowed with approved browsers, which support 128-bit high level Secure Socket Layer protection. The information also passes through a ‘firewall’, a computer program designed to stop unauthorized users from accessing your accounts.” Also, in the remotest possibility that somebody gets hold of your password, that person cannot withdraw your money because BPITrade credit the funds only to your settlement account.

Becoming Your Broker
Trading stocks online is relatively a new experience. Though technically, you are still enlisting the service of a brokerage house, the online facility empowers you to be the broker for your own transactions. The third-party broker becomes part of the back-end services. The online software at your fingertip is at your beck and call, so to speak.